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Dispute between tobacco growers, MNCs persists over prices




  • Tobacco is a cash crop of Khyber-Pakhtunkhwa, mostly being cultivated in Buner, Swabi, Mardan, Charssada and Manshera areas with a large variety of Virginia tobacco. The Khyber Pakhtunkhwa government earns a hefty Rs 50-60billion in federal excise duty, while nearly Rs 250million is generated from the tobacco sector in the province. Similarly, the Pakistan Tobacco Board receives Rs 180 million in taxes on tobacco.

    Despite huge income generation from this sector, exploitation of poor tobacco farmers continues with impunity. Statistics compiled by Pakistan Tobacco Company (PTC), Khyber-Pakhtunkhwa’s total tobacco production is nearly 14 percent higher than the global average, while 22 percent higher than the national level. About six percent tobacco is produced in Buner, 38 percent in Swabi, five percent in Manshera, 25 percent in Mardan, in Charsadda 15 percent, data showed.

    Similarly, data also showed that an area of 36,016 hectares were under tobacco cultivation in the aforementioned districts of Khyber-Pakhtunkhwa. Total tobacco volume is about 93,080 tons, with a production value of about Rs 10.09billion, while its share in national cropped areas is about 64 percent. Pakistan Tobacco Company generated an income of Rs 3.9billion in 2011 from the tobacco farming sector in KPK. The sector provides direct employment to 19,375 persons while 7,556 persons are indirectly supported by PTC activities. Likewise, employment generation in tobacco farming is about 26,931, in manufacturing it is about 7,041, while in distribution and retailing nearly 3,391, with total employment generation of around 37, 363 in KPK. Statistics compiled by PTC in 2012 said that the company invested Rs 5 billion, while making an annual contribution of Rs 6 billion to income generation from the tobacco sector in the province.

    The sector provides full-time employment to about 37,000 persons; the total number of direct and indirect affiliated persons number around 175,000. Growers always blamed tobacco manufacturing companies for allegedly manipulating crop prices. However, Pakistan Tobacco Board’s role in settling crop prices appears to be redundant. Farmers complained that the board usually sides with ” a few influential farming community leaders”. This season, the controversy again developed between growers and companies over the fixing of support prices, as the price set by the board was rejected by farmers.

    Despite a decline in the cost of production, multi-national companies (MNCs) involved in producing tobacco and manufacturing tobacco products, refused to accept farmers’ demands. A 10-member committee, constituted by the Ministry of Food and Agriculture, had carried out a survey in tobacco producing areas of Khyber-Pakhtunkhwa a month ago. According to the survey’s findings, the committee recommended to fix tobacco prices at a minimum price of Rs 169.49 per/Kg with a profit of Rs 12. The committee report submitted to Ministry of Commerce, called for increasing tobacco prices, but the recommended prices were yet to be implemented. After the survey, growers rejected prices fixed at Rs 117/Kg by Pakistan Tobacco Board. Farmers accused the board of favouring multi-national companies.

    Elected representatives of the ruling ANP also expressed displeasure over tobacco companies’ manipulations against poor farmers also called for immediate intervention of the federal government for an amicable resolution of the issue. Growing exploitation of poor farmers has created widespread anger and frustration. Most poor farmers have no other source of income; they are totally dependent on tobacco crop. “Our production cost has increased and fixing prices at Rs 127 per Kg is unjust,” said Mohammad Azam Khan, the president Kashtkaar Co-ordination Committee. He said that tobacco prices should be fixed at Rs 183.4 per Kg to benefit growers. The government, he said, should also bind multi-national companies to purchase tobacco at a rate to offset production costs.

    “We will not tolerate unjustified policies of these companies,” he warned, adding that the PTB had failed to convince the companies to fix tobacco prices in accordance with recommendations of the committee. “A price fixing mechanism was adopted before the purchasing of tobacco by multi-national companies,” said Zahoor Khalil, the chairman of Pakistan Tobacco Board. He said prices were fixed in a balanced manner and in consultation with growers’ representatives.

    “Once announced by tobacco companies, prices could not be revised or increased.” The PTB, he said, had increased for the first time tobacco prices, raising them from Rs 117 per/Kg to Rs 122 per/Kg. “We tried our level best to provide maximum relief to poor farmers, but it was not possible to increase prices after a formal announcement by companies,” he argued. He claimed that the tobacco purchase was in full swing in Khyber-Pakhtunkhwa. He said that tobacco was being purchased at Rs 137 per/Kg in Swabi and Mardan, while it was being bought at Rs 170 per/Kg in Buner. In Mansehra, it was being bought between RS165 and Rs 170 per/Kg.

    Copyright Business Recorder, 2012

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